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Bredesen’s Blunder Redux – Rand study finds more employers will offer health insurance under reform

It’s always fun to poke a stick into the right-wing hornet’s nest and swirl it around a little, like I did in my piece yesterday debunking Tenessee Gov. Phil Bredesen’s overblown predictions of employers dropping health coverage because of the Affordable Care Act (ACA). More proof that Bredesen is wrong, American businesses actually care about attracting and retaining the best and brightest workers, and the opponents of health reform will say anything no matter how silly: the latest study on the issue from the Rand Corporation, an independent, nonpartisan, highly respected consulting firm for both business and government:

RAND found that the ACA will increase employer offer rates (that is, the probability that businesses will offer coverage) to workers. After the new policies have taken full effect, employer offer rates will increase from

? 57 percent under the status quo to 80 percent for firms with 50 or fewer workers

? 90 percent to 98 percent for firms with 51 to 100 workers

? 93 percent to 98 percent for firms with more than 100 workers.

What explains these increases? Firms will increase their offer rates in response to employee preferences, which will change in response to the individual mandate. Specifically, workers will have greater demand for insurance, since there is a penalty associated with being uninsured. In many cases, workers will prefer employer-sponsored coverage to other insurance policies because of the generous tax treatment (health insurance purchased through an employer is generally paid for with pretax dollars, rather than after-tax dollars). Offer rates will increase substantially even among firms with 50 or fewer workers, which are exempt from penalties associated with not offering coverage, because of the greater value employees will have for this benefit.

It might serve political purposes to overlook the facts and ignore the studies, but when people with no partisan agendas look at the health care bill they don’t see a super-scary government “takeover” of the health system. Instead, they see a little more regulation so, for example, private insurers can’t reject people with pre-existing health conditions, and provisions that strengthen our employer-based health system for the better.

2 Comments


  1. […] This post was mentioned on Twitter by Lynn Williams, Adam Linker. Adam Linker said: Bredesen's blunder, part two: RAND says more companies will offer insurance after health reform is implemented http://tinyurl.com/29pqeeb […]

  2. […] Rebutting a myth in the making: An excellent retort to claims by Tennessee Gov. Phil Bredesen (and others) that the ACA will cause employers to drop […]

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